Two Groups Appeal GPU Merger
Air Council, Citizen Power Ask Court
Overturn State Puc's Approval of $11. 9 Billion Deal with First Energy.
Allentown Morning Call ( July 20, 2001 )
Two statewide environmental groups filed an appeal Thursday
to the proposed
$11.9 billion GPU-First Energy merger, claiming the
combination of the power
companies would hamper Pennsylvania's competitive
electricity market and
increase air pollution.
appeal, Philadelphia's Clean Air Council and Pittsburgh's
Citizen Power ask Commonwealth Court to overturn the state
Commission's merger approval.
intended to delay it. It's intended to kill it," Citizen
Power Executive Director David Hughes said of the appeal.
"We think the
merger is anti-competitive and therefore will be harmful not
ratepayers but to competition in Pennsylvania
Council and Citizen Power claim the PUC's decision to
approve the merger was illegal and reflected "arbitrary
and capricious abuse
of administrative discretion."
approved the merger between GPU of Morristown, N.J., and First
Energy of Akron, Ohio, in May. Last month, the PUC approved
an electric rate
settlement the two companies negotiated with the Pennsylvania
Consumer Advocate and several ratepayer groups.
allows GPU to recover money it has lost by purchasing
power on the wholesale market and reselling it to consumers
But the deal also
guarantees that GPU Energy customers won't see
electric rate increases for the rest of the decade. It also
requires GPU and
First Energy to invest $15 million in renewable energy
sources such as wind
GPU serves 1.1
million electric customers in Pennsylvania, including
54,800 customers in Northampton County and 131,500 customers
work and many, many hours of careful attention went into
that, and we think that's a workable settlement," GPU
spokesman Ned Raynolds
said. "It has the endorsement of all the major parties
and the approval of
Power noted that nine groups declined to sign the
settlement agreement, while only five organizations
clear the PUC was desperate to find a way to help GPU," Hughes
said. "The PUC approved the merger without requiring
the companies to meet
their burden of proof that it would be in the public
interest. The PUC also
granted GPU rate relief, even though the company created its
were not available for comment Thursday afternoon.
all its electric generation plants and became a power
transmission company after Pennsylvania deregulated its
in 1997. As a result of record wholesale power prices, GPU
was forced to pay
more for its electricity than it could charge customers
under state rate
As part of its
application to merge with First Energy, GPU had asked
the PUC for a $316.7 million rate hike to recover those
costs. Under the
terms of the rate settlement, those costs will be deferred,
and GPU can seek
rate relief beginning in 2011.
Council and Citizen Power warn that this could result in
high consumer electric rates from 2011 to 2015.
meantime, a merger with First Energy, which owns numerous
coal-fired power plants in the Midwest, would greatly reduce
the amount of
power GPU has to purchase on the expensive wholesale market.
Council claims that will harm the environment by increasing
the amount of toxic plant emissions wafting into
Pennsylvania from First
Energy plants in Ohio.
Energy has a number of power plants that emit pollutants at
many times the levels of modern plants, and they intend to
crank them up to
meet GPU customer demand," said Joseph Otis Minott, the
that the prevailing winds run west to east, this poses a health
risk to Pennsylvanians and to the state's ability to meet
the federal health
standard for ozone."
attorney Harvey Reiter said Thursday's appeal is one of
several that have been filed regarding the PUC merger
approval, and he
predicted the court will combine the various appeals into a
resolving the Pennsylvania appeals, GPU and First Energy need
approval from federal and New Jersey regulators before the
merger can be
between GPU and First Energy would create the nation's
sixth-largest investor-owned utility. The combined company
would serve about
4.3 million customers in New Jersey, Pennsylvania and Ohio
and have annual
revenue of about $12 billion.